Logistics Collaboration Arrives at the Warehouse

With the markets under pressure, many companies are utilizing the latest technology to enable them to work together and match the space they aren’t using with goods that need housing.

Companies like Raj India Trading Co., who found themselves with the not unwanted problem of too much space in it’s Seattle-based warehouse, are deciding to rent out the extra space in order to be more efficient with it.

They get a good rate for this too, according to the real estate brokers CBRE, there is just 5.6% of warehouse space sitting vacant. Raj India Trading Co. has a few more years on their current lease, so they decided to rent out small segments of their warehouse floor on a monthly basis, via Flexe Inc., an online service for warehouse managers and companies who need space.

Warehouse managers benefit from this by offsetting some of what they would pay out in rent. It has also been a help to companies who were over capacity in their warehouses and needed to find extra space to store their inventory. Arrangements like these are part of “collaborative logistics,” which involves companies co-operating so that they can achieve the highest level of efficiency with their supply chain, rather than struggling alone.

This is an emergent trend in the transportation industry, and companies are also sharing trucks in order to bring down their respective fuel overheads and expedite deliveries on oversubscribed urban roads. As space is eaten up in the warehouses, this idea is carried through to storing goods.

The strengthening dollar and the subsequent improvement in US consumption mean that a higher volume of goods are coming in to the country, pushing vacancy rates for suitable real estate, including offices and manufacturing complexes, to the lower limit. In and around the southern ports of California, where a lot of goods arrive from Asia, available industrial real estate only accounts for less than 5% this year.

This makes it very difficult for companies to find space, and much less convenient space, though analysts from CBRE claim that there is a significant amount of unused space within warehouses that are under lease. This is especially true where they are being used for seasonal businesses, such as those who focus on Halloween, the summer vacations and the holiday season. A lot of this room goes unused for a lot of the year, making for a great opportunity for collaborative logistics.

Register for EF5